Perhaps foremost among the judicially recognized fundamental constraints on lead agencies’ power to impose various types of mitigation measures on project approvals in the CEQA process is the “doctrine of unconstitutional conditions” explicated in the Nollan/Dolan cases and their progeny.
The CEQA Guidelines explicitly acknowledge applicable constitutional requirements that mitigation measures must have an “essential nexus” to a legitimate government interest, and that those imposed as ad hoc exactions must bear a “rough proportionality” to the project’s adverse impacts. (14 Cal. Code Regs., § 15126.4(a)(4)(A), (B), citing Nollan v. California Coastal Com’n (1987) 483 U.S. 825, 837; Dolan v. City of Tigard (1994) 512 U.S. 374, 391; Ehrlich v. City of Culver City (1996) 12 Cal.4th 854, 866-877.)
Occasionally, these constitutional limits get tested and conditions of approval are found to violate them. Two recent examples stand out – although neither was in the CEQA context. On October 21, 2014, Judge Breyer of the Federal District Court for the Northern District of California issued a decision granting declaratory and injunctive relief striking down the City of San Francisco’s new Tenant Relocation Ordinance as unconstitutional because it failed to satisfy the “essential nexus” and “rough proportionality” requirements of Nollan and Dolan. (Levin v. City and County of San Francisco (N.D. Cal. 2014) 71 F.Supp.3d 1072) The Ordinance would have forced residential landlords seeking to withdraw rent-controlled units from the rental market to pay displaced tenants a lump sum “rent differential” payment equal to 24 times the difference between (a) the unit’s current monthly rent and (b) an amount purporting to be the fair market monthly rental value of a comparable unit in the City, based on a schedule developed by the Controller’s Office. In some cases, application of this requirement would result in landlords having to pay hundreds of thousands of dollars to displaced tenants as a condition of withdrawing rental units. The Court found the issues ripe for adjudication as a facial challenge to the Ordinance’s requirements, and on the merits found the forced payment requirement imposed on Ellis Act permits to be unrelated in both nature and extent to the burden on tenants caused by the requested withdrawal. The Court reasoned that the withdrawal of a regulated unit does not cause the higher rents to which displaced tenants are “exposed” – i.e., it has no “essential nexus” – and the forced payment was also not “roughly proportional” to any actual impacts imposed on the relocated tenant by the unit’s withdrawal. It remains to be seen whether the Ninth Circuit will uphold this judgment on appeal.
The second recent example is the Second Appellate District’s published opinion filed October 23, 2014 in Bowman v. California Coastal Comm’n (2014) 230 Cal.App.4th 1146. The Court of Appeal, on rehearing, reversed its own prior ruling, refused to apply collateral estoppel, and reversed the trial court’s judgment which had denied a property owner’s mandate petition seeking to strike a development condition attached to a Coastal Development Permit (“CDP”). The Court held the condition – which required a lateral public access easement across a large tract’s shoreline as a condition of its owner’s improving an existing house and barn located over a mile inland – was patently unconstitutional under the Nollan/Dolan standards. As the Court pithily summarized: “Here the Commission does not argue that test is met. How could it when it is not? There is no rational nexus, no [sic] less rough proportionality, between the work on a private residence a mile from the coast and a lateral public access easement.”
While Levin and Bowman aren’t CEQA cases, their application of Nollan/Dolan to strike unconstitutional permit conditions is notable, and serves as pointed reminder to lead agencies of the real legal “teeth” inhering in constitutional limits on their authority to require “mitigation,” whether under the auspices of the CEQA process or generally.
Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for fifty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 3d, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, construction, management, title insurance, environmental law, and redevelopment and land use. For more information, visit www.msrlegal.com.